{"id":1382,"date":"2022-11-17T09:56:52","date_gmt":"2022-11-17T09:56:52","guid":{"rendered":"https:\/\/letskipp.com\/blog\/three-reasons-issuers-will-decline-a-legitimate-transaction\/"},"modified":"2024-11-07T18:23:23","modified_gmt":"2024-11-07T18:23:23","slug":"three-reasons-issuers-will-decline-a-legitimate-transaction","status":"publish","type":"post","link":"https:\/\/letskipp.com\/blog\/three-reasons-issuers-will-decline-a-legitimate-transaction\/","title":{"rendered":"Three Reasons Issuers Will Decline a Legitimate Transaction"},"content":{"rendered":"

No customer appreciates the embarrassment or wasted time when having a credit card transaction rejected. If there\u2019s a genuine risk, then obviously the customer is at fault and should not have attempted the transaction in the first place. But too often, the transaction is, in fact, clearly legitimate, and only the bank\u2019s automated, algorithmic analysis is responsible for the unnecessary decline. Let\u2019s take a look at the three main reasons it happens.<\/p>\n

Suspected Fraud<\/h2>\n

Being told that you\u2019re suspected of being a criminal \u2014 especially by a bank whose card you\u2019ve held loyally for years or a merchant you often shop with \u2014 feels like an insult. Amazingly, among eCommerce merchants<\/a>, this type of declined transaction accounts for about a third of all failed attempts. It may be that the system has spotted a clue that\u2019s often \u2014 but not always \u2014 an indication of fraud: a discrepancy between billing and shipping addresses, a device ID that doesn\u2019t match a previous purchase, larger than usual orders, international usage, or more.<\/p>\n

The cause for these sky-high debit or credit card decline rates is two-fold. First, banks\u2019 fraud platforms are conservative and uncompromising in working to protect their clients. Fair enough \u2014 one might say that it\u2019s better to be a bit too careful, rather than less. But then we come to the second factor: card issuers<\/a> don\u2019t have much data to work with as they conduct their automated assessments. This is particularly frustrating because merchants and card issuers don\u2019t communicate directly, and a merchant may have insightful data from its own fraud prevention provider (or even simply from a history of customer behavior and profile data) that could assure even an aggressive fraud system that the transaction is on the level.<\/p>\n

If the customer tries a competitor\u2019s card and succeeds in getting an authorized transaction, the bank may have just earned itself permanent \u2014 and avoidable \u2014 \u201cbottom of wallet\u201d status.<\/p>\n

Insufficient Funds (NSF)<\/h2>\n

When a customer simply cannot pay for a purchase, there\u2019s little justification for expecting the bank to let them use their card; it\u2019s like asking for a loan without going through any paperwork to guarantee repayment. Many customers who would otherwise face a decline instead choose a \u201cBuy Now Pay Later\u201d offer.<\/p>\n

But a decline due to \u201cinsufficient funds\u201d very often doesn\u2019t mean that there\u2019s no way to pay that bill \u2014 it\u2019s simply that the customer has gone over a credit limit based on a statistical construct like salary, average balance, etc. Often, a life event like a wedding, a new baby, a new house, or even a big party can require exceptional purchases above one\u2019s usual levels. And often there\u2019s a plan in place to cover it \u2014 a loan from a relative, readiness to pay a credit charge for partial payment, or the sale of stock or other assets. They simply haven\u2019t happened yet. They may even have a different, \u201chealthy\u201d account from which they plan to transfer the funds.<\/p>\n

For a one-time purchase, few bank customers are going to spend the time requesting (and waiting for) a credit increase for that single card authorization. More likely, they will grab another card.<\/p>\n

One thing is for sure \u2013 if you\u2019ve been shopping at the same store for years, using the same bank and credit cards, there should be a way to help get that transaction to happen. Once again, the issuing bank has made a decision, but the merchant may be willing to participate in the risk in order to prevent the decline. If only there were a way to have that discussion.<\/p>\n

Bank Policy<\/h2>\n

There\u2019s a long list of individual bank policies that can trigger a decline. For instance, some put a cap on the size of a purchase, even if it\u2019s within a credit limit. Some banks\u2019 fraud systems have little \u201cpatience\u201d for incorrect CVV or expiration date entry, assuming after a mistype or two that the user is guessing. Others automatically suspect overseas purchases and will not allow them until the bank is contacted \u2014 not something you want to do standing at the cashier in Prague or London.<\/p>\n

Easing the transaction approval process<\/h2>\n

All these frustrating scenarios share one common cause: there\u2019s no real-time collaboration between the merchant and bank, putting together all their data for mutual benefit.<\/p>\n

There\u2019s certainly no downside to helping create a clearer analysis for enhanced authorization for merchants, and such sharing by no means requires the bank to suddenly become less conservative or careful. It simply justifies the easing of the restrictive decision based on concrete, existing facts.<\/p>\n

That\u2019s what Kipp<\/a> does. We help both merchants and banks rescue the transaction by collaborating with shared data, keeping their respective revenues, and eliminating the frustration that would otherwise turn away customers.<\/p>\n

Incidentally, Kipp also recognizes that the merchant has invested a lot more than the bank in each transaction through acquisition costs and has more to gain in profit margin. As such, our platform also lets the merchant and bank to use an ask\/bid model to come to an agreement over what it would take \u2014 a percentage of the total sale \u2014 for the merchant to pay as a premium in order to make it worthwhile for the banks to take on a bit more risk and accept the transaction. Again, an \u201ceverybody wins\u201d situation!<\/p>\n","protected":false},"excerpt":{"rendered":"

No customer appreciates the embarrassment or wasted time when having a credit card transaction rejected. If there\u2019s a genuine risk, then obviously the customer is at fault and should not have attempted the transaction in the first place. But too often, the transaction is, in fact, clearly legitimate, and only the bank\u2019s automated, algorithmic analysis … Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":1383,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1382","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"\nThree reasons issuers will decline a legitimate transaction | Kipp<\/title>\n<meta name=\"description\" content=\"Kipp helps eComms and banks rescue legitimate transactions from being declined and avoid bottom of wallet status\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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